14 August 2017
Transcript - #2017156, 2017

Interview with Chris Smith, 2GB

SUBJECTS: Barnaby Joyce; Labor’s $150+ billion tax winter; Bill Shorten’s attack on family trusts; Labor’s proposal to smash the housing market and drive up rents; Bill Shorten’s politics of envy; Dick Smith; the Turnbull Government’s plan to deliver more reliable, more affordable and more sustainable energy.

CHRIS SMITH:

Treasurer, welcome to the program.

TREASURER:

G’day Chris.

SMITH:

Now, I’ve got to ask, is there any chance you could be a citizen of Northern Ireland? Because I went back on your past and your father’s forebears are from Northern Ireland. Have you checked?

TREASURER:

Well, Northern Ireland, Scotland, Cornwall but I can tell you I am a proud citizen of Australia and the Sutherland Shire.

SMITH:

And there is no ambiguity at all?

TREASURER:

No. We go back to the first fleet.

SMITH:

The law is as ass when we have someone like Barnaby Joyce, born in Tamworth, who all of a sudden overnight becomes a Kiwi.

TREASURER:

Well, I think Barnaby made this all pretty clear this morning in the Parliament. He has done the right thing. The matter gets referred off to the High Court and they can deal with that, the Government has strong legal advice on this, so Barnaby can get on with his job which is the most important thing.

SMITH:

But still such a distraction?

TREASURER:

Well, it’s not distracting us.

SMITH:

I think it is distracting so many parties because so many people are involved now.

TREASURER:

Barnaby has made his statement. He has just gone back to work. That is what you would expect him to do. That is what we are doing and so it is not distracting the Government. The High Court will do their job and we will continue to do ours.

SMITH:

The Parliamentary Budget Office and Treasury have conducted independent modelling of Labor’s latest tax plans. They have got big changes on the cards. He has already shown his hand, Bill Shorten, with scrapping of negative gearing, increasing capital gains taxes, changing family trusts. I will talk about both of those in a second. What are the imposts from what they have calculated?

TREASURER:

Well, it is over $150 billion and this is based on the work the Parliamentary Budget Office did after the last election and having that extended out a further year from our estimates. So, it is at least that I should say Chris. It is at least that. I suspect that it is a lot more than that and we will have a lot more to say about that at a later time. We said at the last election that they were going to put a $100 billion tax slug on the Australian economy over ten years. Well, with a few others added to that now and an extra year added it is over $150 billion over ten years.

SMITH:

I have had discussions on this radio program last week with so many listeners who are complaining about the fact that carrots are gone. The incentives to work harder and not be taxed as much have all gone. This is a classic example. I don’t know what Bill Shorten think who negatively gears. I don’t know whether Bill Shorten knows who has family trusts. I think he gets it wrong. I think he thinks those on the rich list have these sorts of things. They may. But aspirational Australians want a break.

TREASURER:

I will tell you, one in five police officers negatively gear. About 62 per cent or thereabouts, of Australians who negatively gear have a taxable income of less than $80,000. Now, they are not rich people. They are just people trying to get ahead and make their way. Nurses, teachers, all of them they negatively gear. They do all of that. And Labor wants to increase their capital gains tax for those who do that in the future by 50 per cent – 50 per cent. When it comes to family trusts for small businesses Bill Shorten doesn’t understand that a family small business is a family small business – the whole family gets involved and he doesn’t seem to understand that. He has already admitted that over 200,000 small businesses will be hit by that initiative. But it is all part of one thing Chris, it is about the politics of envy. You can’t pay the bills with the politics of envy. You have got to pay the bills with a job and a wage and that gets better by encouraging incentives in the tax system. We have cut taxes over the last two years. We have cut small business taxes, personal income taxes, medium-sized business taxes. We have got tax cuts in this Budget for first home buyers. There are tax cuts for people starting businesses. That is what we are doing with tax measures.

SMITH:

So, you could actually argue that anyone who is prepared to really work hard and have two and three jobs, the third job should be taxed almost minimally.

TREASURER:

Well it will get taxed more than the other two now because of the way that the progressive tax system works. Bill Shorten thinks the top marginal tax rate should be 49.5 per cent. That is what he wants. So, basically when you get to that job, that third job which may be a single income family, then you spend one day working for Bill Shorten, one day working for yourself and your family.

SMITH:

I am interested to hear what Dick Smith will have to say tomorrow at this launch of this million dollar television campaign. We spoke to him last week about the book that he has put together. You know where he is coming from. A cut to immigration and therefore we should have increased taxes on the super wealthy. Do you see a time when the Government needs to consider taxing the super wealthy?

TREASURER:

Well, the top ten per cent of taxpayers pay 50 per cent of the tax. I mean we are...

SMITH:

He is talking about the top one per cent though. He is pointing out the top one per cent.

TREASURER:

They pay from memory about 17 per cent. So, we already have a progressive tax system in this country. It is one of the things that protects Australia against the inequality which the Labor Party are talking about. Incomes have been very flat over the last few years but because we have a progressive tax system which means the more you earn the higher your marginal tax rate and because we have a welfare system which the integrity of we need to work night and day to continue to improve - but it is targeted, more targeted than any other part of the world - that means that we protect against the sort of inequality that we do see in many other places. That element of the system is doing its job. Your wage is not going to go up by Bill Shorten taxing someone else’s wage more. Your wage is going to stay exactly the same. What you need is growth in the economy, the business that you work for paying less tax so they can pay you more.

SMITH:

Ok, on his first point though, which he wants to stress, is the fact that we need a cut to immigration because we don’t have the supply of accommodation, we don’t have the jobs for the number of people that are coming into this country. So many people would agree with him.

TREASURER:

What you have to be careful about here is, I spent a lot of time after the Budget, not in the eastern states but in South Australia, Western Australia, Northern Territory and so on and that is where you have population actually going the other way. They are states and territories that need more population. So, what we have to do is make sure that the people go where they need them to go…

SMITH:

We need to decentralise those that are coming into Sydney and Melbourne don’t we?

TREASURER:

This is why Barnaby has got some agricultural offices moving up to his part of the world, and equally we’re seeking to do that through the immigration system. I think they’re good polices to do that, because otherwise even if you cut immigration, then you have just as many people turning up in Sydney and Melbourne and no one going anywhere else. So you still get the traffic jams in Sydney, and the Western Australian economy goes backwards.

SMITH:

Some people can’t be forced to decentralise.

TREASURER:

No, it’s very difficult. You’ve got to go where the jobs are and that’s why at the end of the day unless you’re growing your economy and having policies focused on that, whether it’s our $75 billion we’re investing in infrastructure, reducing the tax burden which I’ve talked about, defence industry investments, trade deals we’re doing. All of this is designed to grow our economy and if you don’t grow your economy, you can’t expect a good health system, or good funding for schools. All of those services depend on a growing economy and Bill Shorten’s politics of envy, that is just going to take is in the wrong direction. It’s a tax winter he wants to put on this country. It will be a very chilly one for growth, for jobs, and wages.

SMITH:

Two quick ones before we let you go. You’ve slammed the CBA over the money laundering scandal, but we’re hearing today that the Commonwealth have decided to keep with Ian Narev until the end of the 2018 financial year. I would have thought that’s rather presumptuous of the bank, considering the fact that AUSTRAC isn’t done with them, and ASIC might have a bone to pick as well.

TREASURER:

The bone I have to pick is with the board. They’re ultimately responsible for this, they’re responsible for the executives and everything that happens within that bank, now, what we’re being very careful to do right now Chris is, AUSTRAC is bringing forward their case, they’ve got a directions hearing in September and it’s very important the Government doesn’t do anything that could let CBA off the hook. So they could get a stay of proceedings, which would mean AUSTRAC wouldn’t be able to pursue that case immediately. So, the Labor party has run around and said you should do this commission and that commission, well they’re muppets they don’t get it. If you went and did that, you’d be providing the CBA with a leave pass on, potentially, the case that we’re bringing in the courts now. We’re acting now. We’ve got them in court.

SMITH:

To think that Narev would stay there till the end of June next year, is a little bit presumptuous.

TREASURER:

That’s for the board to determine, that’s my view. I hold the board to account for what’s happening inside their bank and that’s why I had the chair of the board come and see me last week. I asked her to come down to Canberra fairly promptly, which she did, and we had a fairly constructive discussion, but it was a fairly direct one and I’m expecting CBA to demonstrate to their shareholders and to the Australian public that they’ve got their house in order and there’s a bit of work to do.

SMITH:

Ok, one last one. You were at Wombat Hollow on the weekend. Comfortable place?

TREASURER:

I was down there with the family but I was speaking at an event that Michael Yabsley had arranged.

SMITH:

I got the feeling, you’re the one that bought the coal into the Parliament and you spoke about the opposition being coal-a-phobes, rightly so. And yet you indicated that new high efficient, low emission coal plants, which haven’t been built in this country yet, are not going to be as cheap as we think. We understand the prices are beyond what we’re paying for coal now and what we’re paying through coal-fired power stations, but if we can expect renewables reduce in costs, so too can’t we expect these low-emission coal plants to reduce in cost too?

TREASURER:

I wasn’t speaking against HELE plants at all. Not at all. I think they should be part of the mix going forward and I don’t have any issue with that whatsoever. I think there’s been a bit of mischief in how this has been reported. I’m simply saying that the first priority for base load power is to keep our existing coal-fired power stations open, that’s my point. Your existing coal fired power stations produce energy at a much lower cost than when you build the new ones. Because the old ones were built some time ago and are fully depreciated so it’s important that we use the old coal fired power stations for longer, that’s my point. Now if you can have another one in the future then I’ve got no issue with that at all, I think good luck to them. I know the Queensland Government, if it were to fall into LNP control, if the LNP up there and Tim Nicholls is running the show, then he made it very clear that he will facilitate a new HELE plant up there in Queensland. I think that’s great. What I think we have to be careful about, for those of us, me included who believe that coal does have strong role to play to deliver base-load energy, let’s just get the priorities right. Priority one, let’s keep the ones we’ve got going for longer, and two, let’s not kid ourselves that the new ones are going to produce energy at the same cost as the old ones. They won’t. It will be a lot more than the existing coal ones. But, that’s my only point Chris.

SMITH:

Ok, appreciate your time this afternoon, thank-you for that.

TREASURER:

Thanks Chris.